Oil and Gas Predictions for 2017

Historically, this is what we call the business drivers for each year. We’ve done 2014, 2015, 2016. This year, we’re changing the title. So this is the Oil and Gas Predictions for 2017. Let’s do it.

Number one, petrochemicals

Petrochemicals will be a huge business globally; methanol, ammonia, ethylene, polypropylene, fertilizers, plastics. All that is going to be huge because the raw feedstock is so abundant and so cheap here in the US. It might a good time to be looking at buying some BASF stuff or Dow stock because of that 😉

Number two, global ethylene shortage.

If you don’t know what ethylene is, ethylene is what ethylene crackers take out natural gas and help convert into plastic things like polyethylene. So, it’s the raw feedstock of plastics. Globally, demand for this is going through the roof and the supply is not there. That’s driving a lot of business. Look at all the ethylene crackers that are being built here in the US and globally. So, another major oil and gas predictions for 2017 is ethylene shortage.

Number three, offshore standardization.

The Holy Grail. This industry is a long term low crude price environment which means that we have to drive cost down. Historically, offshore everything is built to suit. So, Exxon builds a platform its way for this part of the world, Anadarko builds a platform this way for its part of the world and everything is different, the trees, the manifold, everything is unique. That needs to go away and it will. We’re just now starting to see this the beginning of that. All the majors have signed a memorandum of understanding to start looking at standardization even though they’re competitors. This is huge. Once again an Oil and Gas predictions for 2017.

Number four, inflation in the service industry on land.

Then, and everybody used to say I’m crazy. At the end of 2017, we’re going to see inflation in the service industry on land. There’s not going to be enough people, enough pumps, enough parts. We’re going to see prices go up. We’re not there yet, but the end of 2017 you’ll actually start seeing inflation from the service companies on land.

Number five, long term hydrocarbon abundant world.

Then, we’re in this long term hydrocarbon abundant world. Oil and gas is everywhere, we don’t know what to do with it. You know think about that because it’s a long term hydrocarbon abundant world, prices are going to stay low for a very, very, very long time. Which is going to drive different business models and that is just – it’s actually a good thing. The price could stay high enough where companies can still make money, but low enough so that the population benefits from this abundant cheap energy, so a great thing an another oil and gas predictions for 2017.

Expensive Oil is Dead is an Oil and Gas predictions for 2017

Number six, expensive oil is dead.

Then, because of that, expensive oil is dead. High pressure, high temperature, ultra deep water, Oil Sands and the North Sea — dead. Sorry. But that in itself is driving business. So, when you think about the decline in North Sea, you have all these opportunities for decommissioning and nobody’s looking at it yet. You’re looking at fifty years maybe even a hundred years of decommissioning work. That’s a lot of money to may be taking these platforms offline. So, just because expensive oil is dead, don’t think there’s not business opportunities. Now, that expensive oil will come back as we improve technologies and as we reduce cost somewhere in the future. Another twenty or thirty years, so that oil will come back, but we’re not there yet.

Number seven, fundamental changes.

Then, the basic fundamentals of oil and gas industry is changing right now. We’re seeing the transformation. So, the typical start out in the field when you’re 18 years old work your way through the company and you end up running parts of the business, that’s gone. All of the senior guys a lot of them have left the industry. The new people that are coming in this industry are young, but they’ve never been on the well, they’ve never picked up a torque wrench. So, fundamentally this industry is changing and I actually think it’s changing for the better.

Number eight, unconventionals go global.

Then, here’s a big one, unconventionals, they go global. The shale plays here in the US, that geology is not unique here. That same geology is in China, it’s in Russia, it’s in Africa, it’s in Europe and your starting and see the beginnings of unconventionals going global. Once again it will keep hydrocarbon cheap because there’s so much oil and gas out there. And another oil and gas predictions for 2017.

Number nine, politically conductive administration.

Then, for the first time in American history, we have the most politically conductive administration for the oil and gas industry ever, right? I’m expecting a lot of this administration. I’m expecting to see a lot of the teeth being removed from the EPA which is a good thing. I’m expecting federal lands being opened up for drilling. I’m expecting a lot of the executive actions that hurt the oil and gas industry will be rescinded. And what I think is really cool is for the first time in my lifetime, people that are putting political office during this administration for the oil and gas industry are actually from the oil and gas industry not politicians. That’s good for all of us.

Number ten, land rules.

And then, finally, number ten the last thing prediction, land rules. Sorry, land rules. I’m looking at all the capex budgets for the majors out there, they’re shifting their budgets, they’re reducing their offshore spin, but they’re increasing their land spin. Once again, that’s a great opportunity if you can get ahead of that.

So, there we did went through really quick our ten oil and gas predictions for 2017. If you like this and found it valuable, can you do me a favor? Can you use the social share buttons on this post and share it with your social media please?

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